Some said it was the institutional investors that pumped the cryptocurrency’s price. Some even rubbished the bitcoin price rally by calling it artificial. Meanwhile, one new research attempted to find what drove moneymakers (if there were any) to an asset whose valuation had dropped by 84-percent in 2018. The answer came out to be simple: the cryptocurrency started to matter and became the talk among academicians.
Indexica, a Los Angeles-based data analytics company, developed a natural language processing-based custom index that processed thousands of textual documents. The firm found that more academics and financial professionals are discussing bitcoin than earlier. It further noted that scholars are enhancing the quality of their discourse when they review the cryptocurrency in research papers, public conversations, and debates.
That, found Indexica, allowed researchers to effectively communicate more deeply about bitcoin with the rest of the world. The process further bridged the information gap that existed between the cryptocurrency market and institutional investors. As a result, the interest of moneymaking individuals, endowments, hedge funds, and family offices, towards bitcoin went up. Down the road, they started allocating a part of their financial portfolio to cryptocurrencies, while considering them seriously as an asset class.
Future Beats Past
Indexica performed text mining on the bitcoin-related textual documents to study whether they were written in past or future tense. The purpose of knowing the tense of a bitcoin conversation was to understand the sentiment of the conversationalist. If he/she spoke about bitcoin in the past tense, it meant he/she was pessimistic towards the cryptocurrency. But if he/she used sentences containing future tense, he/she was positive about bitcoin.
Futurity, as the method is called, showed that the number of future tense references towards bitcoin became higher than that of past tense in April. That, according to Indexica, worked as one of the main factors behind the bitcoin price boom in and after the month.
Zak Albert, the chief executive officer at Indexica, said Futurity had been a popular method to study stock trends. He believed the measure worked the same for bitcoin.
“Think about it, executives will speak of good things they expect to happen on conference calls before they happen,” Selbert told Bloomberg. “They only mention mistakes afterward.”
The research also noted bitcoin frauds, GDP sentiment, and blockchain as some of the highest talking points among academics. Fruitful outputs of those discourses might have also influenced investors to increase their exposure in the bitcoin market.